WEF experts predict a recession

Almost two-thirds of the leading experts of the World Economic Forum (WEF) expect a recession in the global economy in 2023. This is what the WEF report released for the opening of the Davos Forum (January 16-20) says. The survey involved 22 senior economists from international institutions (including the IMF), investment banks, multinational corporations and reinsurance groups. 45% of respondents consider a global recession in the coming year “rather likely”, and 18% – “very likely” (the share of the latest estimate has more than doubled compared to the previous survey in September). 32% see a recession as “highly unlikely” or “unlikely” — also twice as high as in the September poll.

The change in expert assessments at the WEF is explained by worsening expectations. So, in 2023, “weak” and “very weak” growth in Europe is expected by 100% of respondents, in the USA – 91% (in September 86% and 64%, respectively). The changes are related to the deepening influence on Europe of the Russian military operation in Ukraine, as well as the consequences of the increase in interest rates by the leading central banks. Regarding China, opinions are divided: 50% of experts believe that growth will be weak, 50% – strong.

Inflation forecasts vary considerably by region of the world, with expectations of high rates of price growth ranging from 57% of respondents for Europe to just 5% for China. “Most respondents believe that energy and food costs will continue to have a negative impact on households in both high- and low-income countries,” the WEF states. “The current high inflation, low growth, high leverage and high levels of fragmentation reduce incentives for the investment needed to resume growth and improve the living standards of the vulnerable,” said WEF Managing Director Saadia Zahidi.

Among the positive factors noted by experts are the strength of household balance sheets, the peak of inflation already passed, and the stability of labor markets. Respondents also noted the prospects for growth recovery in China after the end of the “zero tolerance” policy for COVID-19 and the potential for an “energy transition”.

Diana Galieva